';■'.■' 


6 OfjuU 


LAND  SETTLEMENT  AND  RURAL  CREDITS 

STATEMTT  OF  THE  NEED 
FOR  AN 
INVESTIGATION 

3Y 

ELWOOD  MEAD, 
•1 
Professor  of  Rural  Institutions, 
University  of  California. 


j4  &^o^i 


DAII.  in;.;'  '   e«RlC.  WHaP 


w±5>y 


Investigations  of  Land  Settlement  and 
Rural  Credits, 


The  Act  under  which  this  Commission  was  appointed  re- 
quires it  to  investigate  and  consider  "The  question  of  land 
colonization  and  the  various  forms  of  land  banks,  cooperative 


credit  unions  and  other  rural  credit  systems  adopted  or 

pro- 

posed  in  this  country  or  elsewhere,  with  a  special  view 

to  the 

needs  of  the  rural  communities  of  this  state."   It  must 

make  a 

report  to  the  Governor  on  or  "before  October  1,  1916." 

The  Commission  "believes  that  the  first  step  in  this  in- 
vestigation should  be  to  ascertain  what  is  needed  to  promote 
the  development  and  prosperity  of  rural  life  in  California. 
To  this  end  it  intends  holding  public  hearings  in  different 
sections  of  the  state,  to  which  all  interested  in  the  subject 
are  invited  to  attend  and  give  evidence.   These  hearings  will 
be  begun  in  Sacramento  on  September  29th  and  will  continue 
until  the  Commission  feels  that  it  is  fully  informed  regarding 
the  causes  Which  are  now  operating  to  retard  the  settlement 
and  improvement  of  the  Staters  agricultural  lands,  and  has 
given  all  who  have  suggestions  to  offer  an  opportunity  to  be 
heard. 

llo  state  has  more  to  gain  than  California  from  improve- 
ment in  methods  of  land  settlement  or  from  the  ad-option  of  a 
system  of  rural  credits.   Qpngn1/' 


Notwithstanding  its  great  natuial  advantages  of  climate, 
soil  and  wide  range  of  products,  there  has  come  a  halt  in 
rural  development.   Over  1,000,000  acres  of  land  susceptible  of 
irrigation  is  uncultivated  and  awaiting  settlement.   Another 
million  acres  could  be  irrigated  if  a  demand  for  land  and  water 
was  assured. 

The  settlement  and  cultivation  of  these  lands  is  needed  to 

insure  the  continued  growth  and  enduring  prosperity  of  our 

» 

cities.  We  ought  in  this  state  to  produce  more  meat,  butter, 
cheese  and  wool.   We  need  more  farms  devoted  to  raising  horses, 
cattle,  hogs  and  sheep.   The  alfalfa  fields  need  to  be  extended, 
the  live  stock  grown  thereon  multiplied. 

This  cannot  be  hoped  for  until  existing  financial  ob- 
stacles are  removed.   Interest  rates  must  be  lowered,  the  time 
for  repayment  of  loans  must  be  extended  and  more  than  all  else 
there  should  be  some  organization  that  will  give  aid  and  direc- 
tion to  beginners  so  that  unimproved  land  may  be  converted  into 
habitable  and  productive  farms  with  the  least  possible  effort 
and  waste  of  money  and  time.  We  want  to  attract  the  young, 
virile  and  ambitious.   We  want  to  keep  the  red  blood  on  the 
farm.  We  are  not  doing  these  things  now.   A  recent  investiga- 
tion of  the  University  of  California  showed  the  average  age 
of  settlers  in  new  developing  districts  to  be  about  45  years. 
Men  ready  to  retire  from  active  life  buy  farms  —  the  boys  and 
girls  flock  to  the  cities. 

A  recent  report  issued  by  the  United  States  Government 
shows  an  increase  of  380,000  in  the  population  of  California, 

-2- 


during  the  last  five  years.   Sev en ty-  three  per  cent  of  this 
increase  was  in  cities  and  towns  of  3,000  and  over.   The  in- 
crease in  farm  population  was  so  small  as  to  cause  anxiety  and 
lead  to  a  "belief  that  changes  in  existing  methods  are  desirable. 

Selling  land  to  settlers  has  becone  so  difficult  that 
coEEiissions  to  land  salesmen  have  reached,  the  incredible 
figures  of  25  to  30  per  cent  of  the  selling  price.   Reliable 
men  engaged  in  the  business  say  that  even  with  these  extraor- 
dinary commissions  they  are  not  prospering.  \Tnen   one  considers 
the  attractions  of  rural  life  in  this  state,  there  is  no  other 
conclusion  except  that  this  halt  in  development  is  due  to  vital 
defects  in  our  policies. 

Two  such  defects  are  plainly  apparent.   Both  are  suscept- 
ible to  removal  if  we  set  about  it.   The  first  is  absence  of 
aid  and  advice  to  settlers  in  the  purchase  and  improvement  of 
farms.   The  second,  the  high  interest  rates,  the  short  time  of 
repayment  of  loans,  and  in  many  cases  the  inability  to  borrow 
money  on  any  terms. 

The  farmers  and  settlers  of  California  who  have  to  borrow 
money  pay  more  than  double  the  average  interest  rate  required 
of  farmers  in  countries  which  have  a  rural  credit  system.  Agri- 
culture cannot  develop  under  this  handicap. 

Below  we  give  the  interest  rates  paid  by  settlers  in 

countries  which  have  a  rural  credit  system.   They  show  the  great 

disadvantages  which  California  farmers  labor  under,  and  also  m.ak< 

apparent  what  an  impulse  would  be  given  to  rural  development  if 

we  had  such  a  system  here. 

-3- 


Country 


Rate  of  Interest 
Per  Gent 


Time  given  for 
Repaying;  Loan. 


Denmark 
Italy 
Holland 
Norway 


3 

2.5 

4.7 

3.5 


65  years 
50  years 


(To  enable  farmers  to  buy  land,  and  4%  to  those  who  own  land) 


Hungary 
Austria 
Russia 


50  years 
54-g-  years 
55-g-  years 


4  to  4.5 
4.5, 
(To  cover  both  amortization  payment  and  cost  of  administration) 
Germany         :       3.5  to  4  :    56-g-  years 

prance  :       4  to  4.5 

(To  enable  young  farmers  to  buy  farms:  2 


Ireland 
Spain 
Belgium 
Switzerland 


3 

5  to  7 

4.5 
4.5 


75  years 
5  to  3  per  cent) 
30  to  50  years 


30  years 
57  years 


The  following  list  includes  countries  with  less  development, 
less  accumulated  wealth,  less  population  than  the  United  States, 
and  consequently  less  able  to  provide  low  interest  rates. 


I 

}at 

e 

cf  Interest      : 

Time  Given  for 

Country     : 

Per  Cent 

Repaying  Loan 

New  Zealand     : 

4 

36-g-  years 

Victoria,  Aus.   ; 

4.5 

36 J  years 

New  South  Wales  j 

3  to  5 

30  to  40  yrs. 

Other  Austral-   j 

ian  States 

4  to  5 

30  to  40  yrs. 

British  and  Ger- 

man South  Africa 

4 

Chile 

4 

33  years 

Argentine 

4 

British  Columbia 

.   t_ 

pe 

r 

cent  more 

than 

:   the 

interest  on 

state 

:    36^-  years 

:   b 

onds 

to 

The 

farmers 

of 

Californi 

a  wi 

th  no  rural 

credit 

sys 

tei 

a  pay 

froi 

a 

6 

12 

ioer  cent 

int 

crest  on 

loans  running; 

from  3 

t 

o  10 

v 

ears, 

and 

0 

ften  wi 

th  excessive 

commissions 

for  sccurin. 

»  the 

1 

oan 

or 

its 

re- 

newal. 

The  introduction  of  rural  credit  systems  in  other  countries 
has  in  every  case  been  a  financial  success  and  a  benefit  to  all 

_4~ 


classes  of  people.   It  has  extended  the  area  of  land  cultivated; 
increased  the  acreage  yield;  and  led  to  the  building  of  better  ■ 
houses,  to  rendering  the  social  life  of  the  farm  more  attractive, 
has  tended  to  keep  the  boys  and  girls  on  the  farm  and  check  the 
drift  to  cities  and  to  other  countries.   Nowhere  has  it  been  either 
an  agricultural  or  financial  failure  and  these  great  results  have 
been  accomplished  in  each  case  without  any  disturbance  or  loss  to 
the  existing  commercial  banking  institutions.   Australia  has, 
perhaps,  the  most  liberal  and  most  highly  organized  rural  credit 
system  of  any  country,  but  the  introduction  of  this  system  has  not 
injured  the  commercial  banks.   They  have  been  more  prosperous 
since  its  introduction  than  before,  not  a  single  bank  has  failed 
and  the  dividend  rate  last  year  varied  from  5-g-  to  14  per  cent 
with  liberal  increases  in  their  reserves. 

It  is  hoped  that  out  of  this  investigation  there  will  come 
some  plan  that  will  give  the  farmers  of  this  state  the  same 
credit  advantages  that  are  enjoyed  by  the  fa.rmers  of  other  coun- 
tries, either  through  the  use  of  the  state* s  credit  or  through 
improvements  in  existing  banking  facilities. 

It  is  believed  that  what  other  countries  have  done  this  state 
should  do,  and  that  it  only  requires  an  understanding  of  the  sub- 
ject and  the  cooperation  of  all  classes  to  be  benefited  to  bring 
about  the  desired  results. 


-5- 


■        MUlUIMUUIIl 

Pamphlet 
Binder 

Gaylord  Bros.,  Inc. 

Makers 

Stockton,  Calif. 

FAT.  JAN.  21.  1908 


920207 


H  6-7**41 


THE  UNIVERSITY  OF  CALIFORNIA  LIBRARY 


U.  C.BERKELEY  LIBRARIES 


CDMb77a?^7 


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